Difference Between Statement of Affairs and Balance Sheet:
What is the difference between statement of affairs and balance sheet?
As real or property accounts are not maintained and also because a capital account does not exist under the single entry system, a balance sheet cannot be prepares in the same way as is done under the double entry system. However, in order to have an idea about the financial position on a particular date information concerning the available assets and liabilities is gathered and a statement is prepared setting in it assets and liabilities on the date; this statement is called a statement of affairs. The assets and liabilities are set out in the form of a balance sheet. The excess of assets over liabilities is shown as capital.
Balance sheet and statement of affairs may be distinguished as follows:
|Statement of Affairs
|| It is a statement of assets and liabilities (including capital) prepared under the single entry system
|| It is statement of assets and liabilities (including capital) prepared under the double entry system.
|| It is prepared partly from a trader’s books, partly from other sources of information and sometimes from memory
|| It is prepared with data available from the books of accounts only.
|| It is compiled from an incomplete books and information, the accuracy of which cannot be relied upon
|| It is prepared from a set of books kept according to the double entry system, the arithmetical accuracy of which can be proved.
You may also be interested in other articles from “single entry system” chapter:
- Definition and Explanation of Single Entry System
- Defects/Limitations/Disadvantages of Single Entry System
- Statement of Affairs – First Method
- Difference Between Statement of Affairs and Balance Sheet
- Conversion into Double Entry System